Question

The Don't Tread on Me Tire Company had retained earnings at December 31, 2015 of $202,000. During 2016, the company had revenues of $402,000 and expenses of $351,000, and the company declared and paid dividends of $11,200. Retained earnings on the balance sheet as of December 31, 2016 will be:

Answer 1

The answer is $241,800

Step-by-step explanation:

Step 1:

We need to find Net income.

Net income = Revenue - expense

$402,000 - $351,000

Net income is $51,000

Step 2.

Closing/ending retained earnings = beginning/starting retained earnings plus net income minus dividend.

= $202,000 + $51,000 - $11,200

=$241,800

Therefore, Retained earnings on the balance sheet as of December 31, 2016 is $241,800